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Spend any amount of time having beers with someone in this industry and you will likely reach a certain point in the evening where they start telling you about how either IC Markets or XM are getting “sooo much volume bro.” If they are an LP, they will look wistful. If they are a broker, they will look envious
We’ve looked at XM’s finances before and concluded that, assuming all of the revenue sent back to its Cypriot holding group entity is profit, then it may be the most profitable company in the industry today.
One country which XM appears to make a lot of money from is Japan. Assuming SimilarWeb data is accurate, then the XMTrading.com URL that the company uses saw approximately 23m visits from Japan in August. That makes it the fourth most popular finance website in the Land of the Rising Sun. How do they do it?
Looking back over the three month period from the start of June through to the end of August, you find that about half of that traffic was direct. In theory that means people typing ‘xmtrading.com’ and coming straight to the website. In practice a lot of traffic isn’t classified properly and gets dumped in the ‘direct traffic’ bucket by analytics.
Be that as it may, another 6.6% comes from referrals. SimilarWeb suggests that, of the five biggest sources of referral traffic, three are websites that are in the adult entertainment industry. Perhaps unsurprisingly then, the largest source of referrals by sector for XM is the ‘adult’ industry. You can look at one of the sites here if you dare.
Another big chunk – about 35% – comes from display ads. If you load up a VPN and set yourself to a Japanese IP address then you’ll start to get these very quickly on almost any financial news website, as well as more generic ones. You can see an example below.
In theory this is all quite basic stuff – XM just pays for its ads to be everywhere. But the consensus among people in the industry seems to be that they have built some incredible IB network in the country.
Is that the case? I don’t recommend spending too much time on Japanese YouTube looking up FX. I started to get ads with Greg Secker dressed as a samurai. But do some digging and you quickly see that there are a lot of people on there that try to get viewers to sign up with XM. For example:
Or…
Now I know what you are thinking. Obviously the XM affiliate marketing team are a bunch of weebs that only pick anime-style content creators to advertise their product. That might be the case but what’s also plausible is that the people making these videos are wary of the fact they are sending clients offshore. As a result, it’s totally logical to make an anime witch or frog that reads out what you want to say instead.
But that also points to another part of the Japanese marketing machine which is quite different from the UK. Readers will know that Japan has restrictions on the FX/CFD industry that are not so different to those now imposed in Europe.
However, at least in the UK, I see little in the way of offshore marketing when you do simple Google searches. For example, if I search ‘trade gold’ in the UK, the first page results in Google are either FCA-regulated brokers or news / comparison sites that only link out to brokers that are regulated here.
In contrast, Japan has a huge number of websites that are just for offshore trading. To be fair, they are also completely explicit about this, so it’s not as though people are being duped into signing up with them.
So if I search ‘trade gold’ in Japanese on Japanese Google, the first result that pops up is a comparison website for offshore brokers that has an article about trading gold. The first ad you see is from XM and the article itself suggests opening an account with…XM.
Scroll further down that same google search and XM is also the second broker to appear, behind only a company I’d never heard of called ‘BigBoss’.
As to why there are so many sites that cater to this ‘demand’ for trading offshore, one reader based in Tokyo tells us that locally regulated brokers can only offer a CPA-type deal, whereas affiliates to offshore firms can earn on volume, like an IB.
“Japanese [regulated] FX brokers can only get paid per account opened,” he said. “So that’s usually 10,000 to 30,000 yen. Overseas brokers pay affiliates based on volume, so there are now thousands of overseas affiliate sites. XM also aggressively advertises for affiliates, much more than other brokers in the past.”
So there you have it readers. Combine the above with some sexy deposit bonuses and better deals for affiliates compared to other offshore competitors and you see why XM is making so much money in Japan.
Thai expo gets raided by police
Since going to Thailand earlier this year, I have taken to reading the Bangkok Post. It makes for thrilling reading. For example, there is some controversy in Thailand at the moment about a senior policeman called ‘Big Joke’.
Big Joke owns five houses and may or may not be involved in an online gambling scheme. He also admitted to giving several journalists money but not for any nefarious reasons. He just felt bad that they weren’t paid that much. Big Joke was supposed to be in the running for the most senior police position in Thailand but, sadly, he appears to have lost out.
Another interesting story reads like something from the film LA Confidential. A group of policemen and a mafia leader were hanging out. And then one of the policemen got shot by a deputy of the mafioso. Then some of the policemen helped destroy the evidence. But then some other policemen seem to have killed the guy that killed the policeman.
The general impression you get is that policemen in Thailand are a bit like characters from the Brazilian movie Tropa de Elite. You want to make sure people like Big Joke get paid on time.
Some people that may have not paid Big Joke on time are the execs that organised the Thai Fintech Festival. ‘Fintech’ is a word FX/CFD brokers use to make it sound like they aren’t FX/CFD brokers. ‘Festival’ is another word for ‘event’. So this was basically the ‘Thai FX/CFD Event’. Or it was supposed to be.
The event got raided by the police and the local regulator – the SEC – also put out a bulletin, warning people not to use unauthorised businesses.
The cancellation reflects some of the things people in the industry that are active in Thailand have been saying. As one worker put it, if he were to post a company’s logo on social media then he’d get a ‘call’ from the police within 12 hours. Frightening stuff.
None of this seems to be stopping providers from doing business there. For instance, a big chunk of the traffic of several brokers comes from Thailand. Maybe they are paying the right people?
One Thai executive seems to have summed up the situation nicely with a LinkedIn post:
“Sometimes, we have to accept doing dirty work to achieve long-term goals. This world has samurais who proudly embrace honor, but it also has brave ninjas lurking in the shadows to ensure success. …Ask yourself, do you want to win the war?”
To all the brave ninjas lurking in the Bangkok shadows, we salute you.
Armenian food bank
It’s the end of CFDs Weekly’s first fiscal year and thanks to our kind advertisers, we have some money stashed in the bank.
We are donating $1,000 of that amount to the Armenian Food Bank. I picked this charity over the others as it seems to have the closest connection to people on the ground. If you would like to donate as well, you can here.
I appreciate this is a bit ‘telescopic philanthropy’ and, if I am still doing this in 12 month’s time, will try to do something in the UK as well (assuming we aren’t broke ourselves by then).
Have a good week everybody.